The only certain thing is change. And Australian businesses are currently feeling the true impact of this statement.

On February 12, 2024, the Parliament approved the Fair Work Legislation Amendment (Closing Loopholes No. 2) Bill. This Bill implements further adjustments to the Fair Work Act 2009 (Cth) (FW Act) following the enactment of the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 (Closing Loopholes No. 1).

What does this mean for your business?

Adaptation.

 In this article, we provide an overview of the key Closing Loopholes adjustments to help you adapt and thrive.

Key Closing Loopholes Bill changes

The Fair Work Legislation Amendment (Closing Loopholes No. 2) bill emerged because the Senate split the original Bill – Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 into two separate bills.

Let’s discuss key elements from both.

Wage theft criminalisation

Wage theft occurs when employers intentionally underpay their employees. *Understanding intent is critical, as underpayment is only considered wage theft or a criminal offence when deliberate. In other words, the prosecution must prove that the employer intentionally underpaid employees.*

Implementing the Closing Loopholes Bill, effective January 1, 2025, will classify wage theft as a federal offence. This means potential penalties of up to 10 years in prison and fines of up to $7.8 million. That’s a LOT of reasons to conduct a compliance audit of your employee payroll practices and identify and address any potential underpayments.

See related article: Underpayments: Ultimate guide for Australian employers

“Same job, same pay” for labour hire workers

Starting November 1, 2024, the Fair Work Commission (FWC) will mandate that labour hire providers ensure their employees receive equal pay to their directly employed counterparts for similar work.

Steps we recommend you undertake to prepare for this Closing Loopholes Bill change:

 Review your current records to identify any discrepancies in pay rates between labour hire workers and directly employed staff.

Regulation of “employee-like” workers

This change is all about increasing protections for independent contractors, especially “employee-like workers” in digital platforms and road transport contractors. These people often have limited bargaining power and receive compensation at or below the rate of an employee performing comparable work.

Therefore, adjustments will allow FWC to set minimum standards orders for employee-like workers, covering payment, working hours, and other crucial terms for fair treatment in the workplace. Similar to unfair dismissal, the Closing Loopholes Bill also introduces “unfair deactivation” and “unfair termination” for employee-like workers on digital labour platforms and road transport contractors.

If your business uses employee-like workers, it’s vital to ensure compliance with all new regulations and treat all your teams fairly.

Right to disconnect

The Closing Loopholes No. 2 Bill introduces a new provision in the Fair Work Act, granting employees the Right to disconnect from employer communication outside of working hours unless deemed unreasonable.

However, some employer groups criticise this provision as they fear reduced efficiency, heightened administrative burdens, and potentially increased operational expenses. Additionally, they express concerns that stricter limitations on after-hours communication could hinder productivity and responsiveness, ultimately affecting their competitiveness in the market.

Note: Contact from an employer is considered reasonable if the individual is compensated for being on-call or if their job description includes such contact.

Other changes

The Bill also instils several other changes, including:

  • enhancing delegates’ rights
  • providing stronger protections against discrimination and harassment
  • facilitating entry to assist Health and Safety Representatives
  • giving workers the Right to challenge unfair contractual terms
  • clarifying the meaning of ’employee’ and ’employer

For the complete list, visit the official Government’s Closing Loopholes website.

Adjusting to changes: Now is the best time to act

As evident, we’re already in a phase of notable shifts in workplace and labour dynamics. Fortunately, as a small business, you can anticipate some privileges to facilitate this adjustment period.

Specifically, the Government plans to exempt small business employers from certain pay obligations under the “Closing the labour hire loophole” measure. Also, they’ll delay the implementation of the Right to disconnect, making it effective 18 months after Royal Assent, as opposed to the sooner timeline for larger employers. See all small business exemptions.

While these exemptions provide some relief, employers of all sizes must begin preparing for the Closing Loopholes Bill adjustments as soon as possible.

Interested in exploring how these changes affect your business?

Feel free to reach out to us for personalised guidance and advice